Public sector union raises alarm over severe financial mismanagement of pension funds

The Public Service and Commercial Union of South Africa (PSCU) has issued a stark warning regarding the alleged financial mismanagement of pension funds amounting to more than R500 million at the Government Pensions Administration Agency (GPAA). 

In a letter to the GPAA CEO Kedibone Madiehe over the weekend, the PSCU requested clarification and remedial measures in response to the troubling findings of the pension administrator’s Internal Audit Report for the 2024/25 financial year.

The GPAA is a government component which reports to the Minister of Finance and administers funds and schemes on behalf of the Government Employees Pension Fund (GEPF), the largest pension fund in Africa. 

It thus administers the pension affairs of approximately 1.7 million government employees and pensioners, as well as the affairs of their spouses and dependants.

The internal audit report was compiled by Abacwaningi Business Solution (ABS) Audit & Advisory Services and found a raft of key governance concerns, which they brought to the attention of management to ensure sound governance. 

According to the PSCU secretary general, Tahir Maepa, this report not only highlights gross financial mismanagement but also hints at potential criminal conduct that necessitates urgent strategic intervention. 

“The report reveals severe financial mismanagement, governance failures, and potential criminal conduct that demand urgent intervention,” said Maepa in the letter.

The PSCU is questioning the apparent discrepancy between the reported R15.3 million irregular expenditure and the R30.8m logged in the internal register. The union is pressuring for a full disclosure of the irregular expenditure report to understand this contradiction.

The union pointed to a seemingly innocuous purchase order of R67m, which ballooned into a staggering R495m lease liability. It raised questions over the motivations behind signing this contract post-audit (23 May 2025), complete with a backdated commencement date (31 July 2024).

The leasing agreement was concluded between LCS and GPAA, signed by Lerato Molefi from LCS and previous acting financial officer, Kgaile Molebatsi.

“Not only does this contract commit GPAA to a very expensive project without budget, the current and future objectives by GEPF and GPAA to modernise were not considered,” reads the audit report. 

“How does a purchase contract of R67 135 442 translate to an additional R428 255 112.72, making this contract a R495 390 554 project, half a billion rands?”

The PSCU is now demanding evidence of Supply Chain Management compliance and the National Treasury approval.

The PSCU also raised serious concerns regarding R11.9m in prepayments, an additional R6.8m for undelivered uniforms, and a R12m NPS system devoid of deployment evidence. It said action was needed on this to recoup these substantial losses.

According to the union, member data appeared to have been shared unlawfully with service providers, exemplifying a gross breach of the Protection of Personal Information Act (POPIA). 

It alleged that ICT projects were executed without ICT department oversight, risking system integrity. Provide all contracts, invoices, and approval documents for the LCS, Jicho, LSG, and Shula contracts. 

The PSCU now requests all pertinent contracts, invoices, and approvals regarding multiple contracts, alongside confirmation of any forensic investigations initiated as per the audit recommendations.

The union has taken a firm stance, declaring that a written response is required within a mere seven working days. 

Should there be no satisfactory reply, the union warned of escalating the matter to various governmental watchdogs, including the Minister of Finance, the Standing Committee on Public Accounts (Scopa), and the Public Protector, alongside the Hawks—South Africa's Directorate for Priority Crime Investigation.

Madiehe and the GPAA were not immediately contactable over the weekend. 

The 66-page audit report by the ABS Audit & Advisory Services confirmed the concerns raised by the PSCU by giving each of the 

The auditors recommended, among others, that all contracts issued without budget availability be regulated by seeking approval from the GEPF and that all contracts be vetted by GPAA legal chief director and amended to include risk management clauses to protect the GPAA.

“We advise that consistent and continuous compliance is required to ensure reasonable reliance on controls currently in place; and to ensure the consistent attainment of business objectives, and to meet the requirements of the laws and relevant regulations. Furthermore, where the management of risk, control and governance is considered requiring improvement, management should ensure that the residual risks and management concerns are appropriately addressed,” concluded the auditors.

“By addressing the weaknesses that have been identified, this will ensure that the controls implemented within the Government Pensions Administration Agency and its related processes are improved.”

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